(Adds Viasat CEO's comments, in last five paragraphs.)
DOW JONES NEWSWIRES
ViaSat Inc. (VSAT) agreed to acquire satellite-Internet provider
WildBlue Communications Inc. for $568 million in cash and stock in
a deal that comes as Liberty Media Corp., owner of 37% of WildBlue,
is reordering its holdings.
WildBlue, which provides high-speed Internet access largely to
rural areas, is more than one-third owned by a Liberty Media
tracking stock, Liberty Entertainment (LMDIA). Those operations are
in the process of being spun off completely from Liberty Media, a
deal which many have expected will ease a potential acquisition of
DirecTV Group Inc. (DTV). Liberty Media owns 52% of the largest
satellite-television provider in the U.S.
ViaSat, a provider of satellite and other wireless-communication
products, said WildBlue has over 400,000 customers. The deal paves
the way for an expansion of WildBlue's broadband service using
ViaSat technology, including a ViaSat-1 satellite scheduled to
launch in early 2011, ViaSat said. WildBlue developed its satellite
in 1997 and launched its commercial service in 2005.
By joining forces, the two companies seek to reduce the
long-term costs and risks of expanding Internet access via
satellite. The spread of these services has been impeded by hefty
start-up costs, as well as technical challenges that historically
made it hard for satellites to compete with cable- and phone-based
rivals on price and quality.
Under the agreement, expected to close between January and
April, ViaSat will issue $125 million of stock, within a range of
4.3 million to 5.7 million shares. The company has about 32 million
outstanding.
It will also pay $443 million of cash, but the cost will be $68
million less when accounting for the cash on WildBlue's books. The
company will need financing to pay for the cash portion of the
takeover.
WildBlue's owners, which also include Kleiner Perkins Caufield
& Byers, Intelsat Ltd. and the National Rural
Telecommunications Cooperative, will be able to nominate one person
to ViaSat's board.
The company reported improved results in its latest quarter amid
what ViaSat Chairman and Chief Executive Mark Dankberg in August
called a "robust" order pipeline.
ViaSat's new satellite will have nearly all of its capacity
aimed at regions where Wild Blue is most capacity-constrained,
including large parts of the Eastern U.S. and sections of the West
Coast, according to Dankberg. While initially targeting millions of
rural customers for whom satellites currently are the only feasible
way to access the Internet, Dankberg sees the expanded service
eventually also competing head-to-head with broadband services
provided by cable-television and telecom rivals in suburban
areas.
"We believe our satellite approach is a quantum improvement"
that customers will appreciate, Dankberg said.
According to some ViaSat projections, the combined entity could
attract as many as 35,000 customers a month. That would be a
substantially higher rate than during Wild Blue's first months of
operation.
Shares of ViaSat closed down 1.6% at $27 in regular trading
Thursday, and were down a penny after hours.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com; and Andy Pasztor, The Wall Street
Journal; andy.pasztor@wsj.com.